Tastylive: 7 Minutes That May Change Your Earnings Trading

Investors who turn to trading often start with strategies involving a company’s earnings report. Why? It’s a date known in advance that can lead to a big move in the share price. And it’s often a binary outcome. Shares either rise significantly or fall.

The question usually comes down to the extent of an earnings-related move. And for how long that move can last. Traders who put the statistics on their side can improve returns with this trading strategy.

For instance, from 2018-2024, earnings from the five largest companies by market cap tended to result in an upward movement 67% of the time.

The changes would often play out right after the earnings report. And the upward trend would usually last for up to five days. This continuation holds up for the second day, but can weaken going into a 4-5 day period.

More interestingly, while stocks did fall the other third of the time, there were nearly no instances of a sideways move.

So, traders looking to bet on earnings should pick a direction. And use a stop loss strategy to avoid a losing trade. And recognize that losing trades will occur.

Of course, over the longer-term, a company’s continued earnings growth will move prices higher. But grabbing some wins off of earnings season can help boost investment returns.

To see the full data on trading earnings reports, click here.